Rev. Rul. 56-332

Advice has been requested whether the exemption from the excise taxes on gasoline, lubricating oil and special motor fuels, sold for use as fuel supplies on civil aircraft engaged in foreign trade, applies to the sale of such products to a company for use in aircraft owned and used by the company for transporting its personnel to and from its business properties located in a foreign country.

Under the provisions of section 4222 of the Internal Revenue Code of 1954, the manufacturers excise taxes on gasoline and lubricating oil and the retailers excise tax on special motor fuels do not apply to the sales of such fuels for use in civil aircraft registered in the United States and actually engaged in foreign trade or trade between the United States and any of its possessions. Section 314.28(f) of Regulations 44, made applicable to the 1954 Code by Treasury Decision 6019, C.B. 1954-2, 47, provides that the term `trade,' as used in the foregoing provision of the Code, includes transportation of persons or property for hire and the making of the necessary preparations for such transportation.

It is held that since the aircraft in the instant case is not engaged in the transportation of persons or property to or from a foreign country for hire, but is used to transport the personnel of the company to and from its business properties located in a foreign country, the exemption provided by section 4222 of the Code is not applicable to products sold for use as fuel supplies on such aircraft. Therefore, sales of gasoline, lubricating oil and special motor fuels for such use are subject to tax.